Originally published at SeafoodSource
Navigating Sanctions: Challenges and Adaptations for Russian Salmon Companies
Natasha Novikova is the founder of ForSea Solutions, a sustainability and technical consultancy for the seafood industry based in the U.S. state of Oregon that was formed in 2016 to provide technical guidance to U.S. and Russian fisheries working to achieve Marine Stewardship Council (MSC) certification and implement fishery improvement projects (FIPs). It has provided technical guidance and leadership support to more than 30 Russian salmon and pollock fishing companies, helping them to achieve MSC certification, and an additional five that are currently in various stages of advancing toward MSC levels of sustainability. Novikova has also worked to connect Russian salmon firms with High Liner Foods, The Fishin’ Company, and Gorton’s.
SeafoodSource: What are the salmon companies you’ve worked with in Russia going through right now, following the international sanctions that have been placed on Russia following its invasion of Ukraine?
Novikova: Most of my clients were in shock and disbelief for the first week to 10 days due to this completely new reality for their potential markets. But now they are generally optimistic that the sanctions will pass and business will be back to normal. I think that for them, it’s just the way they’re dealing with the situation. I’m pretty certain that there’s a huge portion of the Russian population, and the Russian business community as well, who just want stability.
Russia’s salmon season starts in June or July [depending on the region]. The fishermen are actively planning for the fishing season. Right now, they’re still relying on the notion that this will pass and there will be a new opportunity, whatever emerges. I’m quite sure most of the companies are having conversations with buyers, especially in countries that haven’t issued sanctions, and trying to line up markets for the upcoming season. Russians are really good about adapting and figuring out ways to survive. They have a mindset of perseverance. Russian people have dealt with many other tragedies and catastrophes in their lives.
Impact of Sanctions on Global Seafood Sustainability Efforts
SeafoodSource: Do they have a plan for what they’re going to do with their volumes now that several of their major markets are closed to them?
Novikova: I don’t think they know exactly what they’re going to do, because it’s too early to say. I think they believe that the Asian markets will help them – China, in particular. They are talking about potentially trading in yuan and getting away from the dollar and euro. Salmon forecasts this year are down, so they are not expecting a huge amount of product to try to sell. Unfortunately, this is happening just as Russian suppliers have developed relationships with American and European companies to get their fish to American and European markets. Now with sanctions in place, they will be forced to go to markets that are still available to them, and if you look around, generally, those are the markets that pay the lowest prices. That’s unfortunate because if Russian salmon stops going to Europe and America, they will likely go to other markets where sustainability may not be a priority.
SeafoodSource: So you’re saying this could potentially hurt global seafood sustainability efforts?
Novikova: I think so. Over the past decade and more, there has been an enormous effort from salmon fishermen, the scientific community, and from so many organizations, including WWF, the Wild Salmon Center, Ocean Outcomes, MSC, and other NGOs, that has borne fruit and produced enormous volumes of MSC-certified salmon products that are in demand in North America and Europe. Russian salmon companies say Chinese buyers don’t require the MSC label. Without the incentive to maintain the eco-label, there is a strong possibility that Russian salmon fishermen will decide to opt out of sustainability programs.
It’s good news MSC plans to continue working in Russia. Although ASI (an accrediting body for MSC certifiers) has instituted a six-month suspension on any new assessments or adding new companies [or] species to existing certificates, which is a hit for some new companies, at least that the existing certificates will remain. But long-term, it’s still a big question how sanctions will impact MSC-certified fishery programs and FIPs in Russia.
Future Prospects for U.S. Seafood Buyers Amidst Russian Market Disruptions
SeafoodSource: If U.S. buyers are cut off from buying seafood originating from Russia, what do you think will mean for American buyers and consumers?
Novikova: For buyers, their whole business model could be just falling apart like a house of cards. Right now they primarily source from salmon originating from Alaska and Russia. When salmon runs are down in Alaska, they can source from Russia and vice versa. Their business model depends heavily on salmon from both regions and they depend on those volumes. The world has been demanding protein and seafood, especially during COVID pandemic. How can you take away Russian volumes from the market without impacting global prices and availability? I think there’s going to be a negative trickle-down effect for everybody involved in the supply chain.
SeafoodSource: Why don’t Russians eat more seafood, especially domestically caught products like salmon?
Novikova: Russia has 11 time zones – it’s a huge country – and there have been logistical issues getting fresh or even frozen salmon from the Russian Far East to the population centers. They’ve been working on those issues, by improving the rail system and even exploring the use of the Northeast Passage to bring salmon to Saint Petersburg and Moscow. Not to mention that consumers in western parts of Russia have been enjoying farmed salmon since it proved to be a steady supply and consistent quality in comparison with wild-caught salmon products. And there’s also been a push since 2014, when the first round of sanctions was imposed, to increase consumption of domestically produced goods. But my worry is that those efforts are not likely to have much traction right now, when the country is potentially in an enormous crisis. Russians are currently struggling to find groceries that they would typically buy. The demand for luxury items such as salmon and other seafood is simply beyond the reach of most Russians.
SeafoodSource: Are there any other angles to this situation you believe will impact the seafood industry?
Novikova: One other big piece of the puzzle is Russia’s ongoing efforts to renew its fleet of fishing vessels. Russia has been trying to improve its shipyards and become less dependent on foreign shipbuilding, but they are still dependent on other countries for equipment and machinery, and to some extent, for expertise in shipbuilding and design. With Russia’s ties to other countries being severed, this will put them in a really tight situation to figure out whether they can continue their very aggressive shipbuilding plan logistically. On the seafood side, this is primarily going to affect the huge conglomerates like Norebo and the Russian Fishery Company, which have been investing significantly into improving their fleets and advancing their processing capacity and capabilities. And it’s these large companies that are primarily making their money through exports. How are they going to pay for these investments now? It’s unlikely any of them could have possibly calculated what is happening now into their projections.
